Education deductions, other tax breaks among AZ bills signed into law

2013-06-21T00:00:00Z Education deductions, other tax breaks among AZ bills signed into lawHoward Fischer Capitol Media Services Arizona Daily Star
June 21, 2013 12:00 am  • 

PHOENIX - Arizona parents, grandparents, relatives and friends may have a new reason to help someone attend college.

Legislation signed Thursday by Gov. Jan Brewer increases the deduction that can be taken by those who donate to education savings accounts. And while these are deductions and not actual tax credits, they can reduce a donor's state tax liability a bit.

Other bills signed Thursday include:

• Making it easier for corporate defendants to avoid being rushed into settling class-action lawsuits;

• Requiring state universities and community colleges to offer free tuition for children who have been in foster care;

• Prohibiting cities and counties from requiring home builders to form "planned communities," complete with homeowner associations, as a condition of getting required approval.

City election change

Brewer also approved a measure designed to help cities deal with a state law approved last year that requires all elections for mayor and council beginning in 2014 to be only on certain days during even-numbered years.

Some cities like Tucson, Phoenix and Casa Grande have elections in odd-numbered years, contending the separation ensures their issues are not swallowed by other races. Opponents said odd-year elections depress voter turnout, allowing special interests to dominate.

But the new law created a problem for offices whose terms are up in 2015 or 2017, as elections those years would be illegal.

This fix allows cities to extend the terms beyond their normal length. That would permit an official to continue serving until the next even-numbered year election even though that is longer than the time for which he or she was elected.

A Pima County judge is currently weighing a lawsuit filed by Tucson and Phoenix to overturn the law.

School Programs

The governor also signed several measures dealing with schools.

One requires adding personal finance education into social studies classes, including explanations on how education, career choices and family obligations affect future income.

Other elements of the course must cover the influence of advertising on consumer choices, identifying investment options available to individuals, and the advantages and disadvantages of using various forms of credit, along with how credit history is determined.

Another permits, but does not require, schools to offer CPR training in grades 7th through 12th.

And schools will be required to stock doses of epinephrine to administer to someone who suffers an allergic reaction - but only if the state provides the up to $700,000 necessary on an ongoing basis to replace the drugs as they expire.

Brewer also agreed to expand an existing program that allows students in low-performing schools to get what amounts to a voucher to attend a private or parochial school. It opens the program to kindergartners and boosts the size of the vouchers for children transferring from charter schools.

The change in state income tax laws deals with 529 education savings accounts, named after a section of the Internal Revenue Code.

Anyone can contribute. Unlike a retirement account, though, there is no federal tax deduction for putting money into a 529 account. But if the money is used for education expenses, there is no tax on the earned interest.

Arizona, however, allows individuals to deduct up to $750 in contributions from taxable state income. The figure is doubled for married couples filing jointly.

The new law increases that to $2,000 for individuals and $4,000 for couples. It is retroactive to the beginning of the year, meaning it applies to donations made this year for tax returns filed next spring.

A married couple in the top tax bracket of 4.54 percent who make the maximum donation would reduce what they owe $181.60. Legislative budget analysts predict the change will reduce state tax collections by $4 million a year.

Other tax breaks

The enhanced deduction is only one provision tucked into what became a catch-all for pet tax breaks.

One change exempts the rental of ignition interlocks from state sales taxes. These devices, required on vehicles operated by convicted drunken drivers, are designed to prevent a vehicle from starting unless a "clean" breath sample is produced.

Another eliminates the requirement that individuals must itemize their state tax returns to get a tax credit for donations to certain qualifying charities. That change could cut state revenues by $18 million.

There also is a provision that nonalcoholic drinks in a can are presumed to be food, and therefore not taxable, even if they are sold as energy-drink supplements.

Class-action lawsuits

The change in rules on class-action lawsuits stems from concerns brought by lobbyists who represent companies that tend to get sued over actions that can affect many people, everything from pollution to explosions.

Under existing law, a single person can seek to represent everyone in the "class" of those affected.

The argument for class-action lawsuits is that issues get resolved in a single case. And this can be important for plaintiffs whose damages may be too small to pay an attorney to fight a large company on an individual basis.

But Rep. Justin Pierce, R-Mesa, said companies facing class-action lawsuits - and the potential for large verdicts - can be pressured into settling cases rather than fighting them.

And what's worse, Pierce said, is companies cannot challenge the class-action designation until after a trial is over.

The new law permits a party to go to the Court of Appeals immediately once a judge makes a decision to designate a case as a class action.

Pierce said if the appellate judges reverse the lower court, that can alleviate the pressure to settle.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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